Insurance and Climate Change column

Climate Change Could Push Flood Losses in U.S. to $40B by 2050

By | February 17, 2022

Climate change could result in the financial toll of flooding rising by more than a quarter in the U.S. by 2050, according to new research.

The research, led by the University of Bristol and published in Nature Climate Change, also shows disadvantaged communities will bear the biggest brunt.

The research forecasts average annual flood losses would increase by 26.4% from $32 billion currently to $40.6 billion in less than 30 years.

Scientists analyzed nationwide property asset data and flood projections to develop a high-resolution assessment of flood risk in the US.

The estimates of financial loss include damage to homes, businesses and their contents.

The research reveals poorer communities with a proportionally larger white population face the most danger at present, future growth in flood risk will have a greater impact on African American communities on the Atlantic and Gulf coasts.

Predicted population change was also shown to have a have a significant effect on flood risk, resulting in four-fold increases compared to the impact of climate change alone and sending costs further spiraling.

“Climate change combined with shifting populations present a double whammy of flood risk danger and the financial implications are staggering,” lead author Oliver Wing stated. “Typical risk models rely on historical data which doesn’t capture projected climate change or offer sufficient detail. Our sophisticated techniques using state-of-the-science flood models give a much more accurate picture of future flooding and how populations will be affected.

More on Sea Level Rise

The forecast of more sea-level rise in the previously mentioned report seems to jibe with a new report from the National Oceanic and Atmospheric Administration.

The U.S. is expected to experience as much sea level rise by the year 2050 as it witnessed in the previous 100 years, according to a NOAA-led report updating sea level rise decision-support information for the U.S. released today in partnership with half a dozen other federal agencies.

The report, the Sea Level Rise Technical Report, provides up-to-date sea level rise projections for all U.S. states and territories by decade for the next 100-plus years based on a combination of tide gauge and satellite observations and all the model ensembles from the Sixth Assessment Report of the Intergovernmental Panel on Climate Change.

The report projects a rise of an additional 10-12 inches in sea levels along the coastline will by 2050.

“For businesses along the coast, knowing what to expect and how to plan for the future is critical,” U.S. Secretary of Commerce Gina M. Raimondo said in a statement. “These updated projections will help businesses, and the communities they support, understand risks and make smart investments in the years ahead.”

The report also finds that anticipated sea level rise will create a marked increase in the frequency of coastal flooding, and by 2050 that moderate flooding is expected to occur more than 10 times as often as it does today.

CNP Assurances

France’s CNP Assurances said it will no longer finance new oil and gas projects or invest more money in companies that are planning to do so.

The company, which is seemingly joining the growing ranks of insurers taking a more pro-active approach to tackling global warming, said it’s acting in response to scientific reports, Reuters is reporting in an article this week on Insurance Journal.

CNP will continue to finance subsidiaries of energy companies dedicated exclusively to renewable projects, and invest in green bonds, and going forward, the compamy plans to publicly disclose its holdings in the oil and gas sector on an annual basis, according to Reuters.

At a U.N. climate conference late last year, banks, insurers and investors with $130 trillion at their disposal pledged to put combating climate change at the center of their work, including French public bank Banque Postale, which last year committed to stop providing services to the oil and gas sector by 2030, the article states.

“To achieve the goals of the Paris Agreement (on tackling global warming), it is necessary to gradually reduce the use of fossil fuels,” Olivier Guigné, CNP’s group investment director said in a statement on the company’s website. “The measures adopted today by CNP Assurances aim to contribute to this.”

CoreLogic

Catastrophe modeler CoreLogic reports more than 14.5 million single- and multifamily homes were impacted by the largest natural catastrophe events of 2021, with an estimated $56.92 billion in property damage.

That means one-in-10 homes in the U.S. were impacted by natural disasters in 2021.

CoreLogic released its 2021 CoreLogic Climate Change Catastrophe Report, which analyzed 13 major hazard events of 2021, including hurricanes, tornados, hailstorms, wildfires and winter storms.

The modeler broke down impacts to properties by perils. Some 4,101 homes last year were impacted by wildfire for $1.46 billion in property damage. The number of properties was worst for winter storms, with 12.7 million properties impacted at $15 billion in property damage.

The greatest losses came from hurricanes, with 1.2 million homes impacted and property damage of $33 billion.

The report notes that natural disasters are increasing in frequency and severity, while impacting regions that are not well prepared to handle the losses and economic disruption.

The total written premium in California between 2017 and 2020 for dwelling fire and homeowners insurance combined, for example, rose by more than 27% (from $8.7 billion to $11.1 billion).

The report calls out climate change as a culprit in a few places.

“With climate change affecting the ocean’s temperatures, tropical cyclone activity is expected to become more frequent and destructive,” the report states.

Past columns:

Topics Catastrophe USA Trends Profit Loss Flood Energy Oil Gas Climate Change Property

Was this article valuable?

Here are more articles you may enjoy.